Would your products sell in China. (Eclectic Woodworking).

It's no secret that many U.S. wood product manufacturers have been lured to China by the promise of lower production costs. Indeed, the United States imported more than $4 billion worth of residential furniture from China last year. Other wood products, from cabinets to office furniture, are also pouring into the U.S. from the increasingly capitalistic communist country.

Is it good business to perceive China as only a source for imports? How about manufacturing wood products for the Chinese market? How about branding your products in China a la Ethan Allen to take advantage of the population's preference for American brands?

These are legitimate questions which run counter to the conventional wisdom that China is only a seller, not a buyer.

In late February, representatives of 15 member companies of the Kitchen Cabinet Manufacturers Assn. toured China to explore outsourcing options and the overall market. They were also presented with some powerful statistics about the Shanghai, China, market by Julie Chang Holt, commercial representative with the American Consulate General, U.S. Commercial Service, based in Shanghai.

Chang Holt told the group that in Shanghai alone there were 300,000 housing starts in 2002. Development associated with Expo 2010 World's Fair in Shanghai is expected to accelerate the city's housing activity even further.

She said the Chinese market sells primarily shell homes, which are basically devoid of any fixtures, cabinets or furniture when the residents move in. Thus, the responsibility for transforming the shell into a livable space is the homeowner's responsibility. This creates a large market for interior decoration and furniture products. Carpeting, flooring, furniture, and fixtures are just some examples of the possible areas U.S. exporters might be able to penetrate the Chinese market.

According to Teh Peng Hong, business development manager for National Starch & Chemical Co., U.S. wood products manufacturers are missing an opportunity to sell their branded products in China. "One thing for sure is that Chinese love American products and American brands," Hong says. "They long for a better life and they see it in the types of products offered by the American companies."

Chang Holt offered her top three tips for working in China: "Due diligence, due diligence, due diligence. If you meet 10 people, three of them are really good partners," she says.

The U.S. Commercial Service has five offices in China: Shanghai, Beijing, Shenyang, Chengdu and Guangzhou. Among other services the U.S. Commercial Service provides are trade counseling, market research assistance, networking connections with key players in the China market, and advocacy.

The U.S. Commercial Service has developed a helpful Web site for U.S. companies interested in doing business in China: www.buyusa.gov/china.

Estimated 2002 Retail Kitchen Sales in Shanghai

Manufacturer  Number        Avg. Kitchen  Annual Sets  Share
                                Cost

Foreign       6 (2 German,    $12,000          720      1%
              4 Italian)
Local large   10              $1500         12,000     25%
Local small   300             $730          36,000     74%
Total         316                           48,720

Source: U.S. Commercial Service